NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency (KBRA) has released a research entitled
“Declining Mortgage Lending Volumes Ahead.” The report makes the
following key points:

The Federal Housing Finance Agency's (FHA) decision to raise
conforming loan limits for the first time in a decade is being met
with enthusiasm from the mortgage industry, but KBRA disagrees with
the consensus view that this move will prove to be a significant
positive factor for future residential mortgage loan origination
volumes. We believe that 2016 year is likely to be the peak in terms
of 1-4 family mortgage origination volumes for years to come.

With interest rates rising, the economic and financial environment for
the US housing market is going to become progressively less
hospitable. After nearly a decade-long recovery in both HPA and
mortgage lending volumes c/o the Federal Open Market Committee, KBRA
believes that the US housing sector is in the process of normalizing –
albeit from rate levels that are, in historical terms, still extremely
low.

Given the regulatory environment and rising trend in interest rates,
we believe that lending volumes for both insured depositories and
non-bank lenders are likely to fall in 2017 and beyond as relatively
lucrative refinancing volumes dry up. This downward trend in mortgage
volumes could be a negative factor on earnings in Q4 2016 and beyond
for banks and non-banks alike. KBRA notes that no amount of
prospective regulatory relief or changes in the rules for loan
guarantees in Washington can fully offset the dampening effect of
rising interest rates on the home finance sector.

KBRA is registered with the U.S. Securities and Exchange Commission as a
Nationally Recognized Statistical Rating Organization (NRSRO). In
addition, KBRA is recognized by the National Association of Insurance
Commissioners (NAIC) as a Credit Rating Provider (CRP).